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Wednesday, January 30, 2013

Managing RUT Options positions

Today I closed the RUT February 920/925 Bear Call spread that I originally opened on January 18 as part of a trade adjustment.

BOUGHT TO CLOSE 5 February 920 CALL @4.70
SOLD TO CLOSE     5 February 925 CALL @3.10

Saturday, January 26, 2013

Weekend Portfolio Analysis (01-26-2013)

Another week of slow and painful upside movement. SPX from 1485.98 to 1502.96 for a 1.14% gain. Many traders, including myself have been predicting a top for a while. We've had no success. The only thing I have forecasted correctly was the fact that if the market kept going up it would be in a slow fashion, and so it has been with gains of 0.38% two weeks ago,  0.94% last week and 1.14% this week. The market simply doesn't crash to the upside.

Friday, January 25, 2013

February $SPX Credit Spread Roll Up

As tweeted before market close today, I rolled up the SPX 1520/1525 February Call Credit Spread. The position had been initially entered back in January 4.

BUY TO CLOSE 5 February 1520 CALL @ 5.30 (Initially sold for 3.75)
SELL TO CLOSE 5 February 1525 CALL @4.00 (Initially bought for 3.10)

February 2013 $SPX Put Credit Spread

The following trade was entered:

Sell 5 SPX 1450 February Put @3.60
Buy 5 SPX 1445 February Put @3.10

Wednesday, January 23, 2013

Arbitrage in Forex explained

Arbitrage in trading is a situation where a trader can take advantage of pricing inefficiencies and enter a position where there is a locked in profit and no risk at all. I slightly talked about arbitrage in options trading a while back in my article about the Box Spread. But I wanted to find out about it in Forex. There are a couple ways, but this one is the easiest to understand.

Tuesday, January 22, 2013

March 2013 $SPX Iron Condor

March $SPX Iron Condor 1355/1360/1560/1565 for 0.75 credit.

BUY 5 March 1355 PUT @ 4.50
SELL 5 March 1360 PUT @4.90

SELL 5 March 1560 CALL @1.85
BUY 5 March 1565 CALL @1.50

Saturday, January 19, 2013

Weekend Portfolio Analysis (01-19-2013)

I closed the RUT 890/895 February Credit Call spread yesterday, for 2.60 debit. Initially sold for 1.80 credit, that represents a loss of 0.80. In 5 contracts per leg that's a $400 loss. I decided to open another Call Credit Spread in February, that's what many would call an adjustment.

Saturday, January 12, 2013

Options strategies for low implied volatility environments

My little experience selling Credit Spreads is that the worst possible market environment for option sellers is a market that slowly and almost stubbornly trades higher and higher. I've said that before. The Indexes go up little by little almost painfully and the volatility, the VIX and with it Options' premium in general go down.

Weekend Portfolio Analysis (01-12-2013)

Well, well, well, no trading for me this week, as the market barely did anything. The SPX index started the week at 1466.47 and closed at 1472.05 for a 0.38% gain. We are now trading right up against resistance on the SPX.

Saturday, January 5, 2013

Friday, January 4, 2013

February 2013 $SPX Bear Call Spread

SELL 5 SPX 1520 Feb. 2013 CALL (@3.75)
BUY 5 SPX 1525 Feb. 2013 CALL (@3.10)

Credit: $0.65 (0.65 * 100 * 5 = $325)
Margin: $4.35 (4.35 * 100 * 5 = $2175)

Wednesday, January 2, 2013

RUT Call Credit spread adjusted

Initial trade entered on December 5, 2012 selling RUT 870/875 Credit Call spread for 0.70 credit.
Adjusted today when RUT hit 868 in the morning a few minutes after market open.

BUY TO CLOSE 5 RUT 870 Jan. 2013 CALL @12.07  (Initially sold for 3.30)
SELL TO CLOSE 5 RUT 875 Jan. 2013 CALL @9.37  (Initially bought for 2.60)

Debit 2.70
Initial credit obtained was 0.70.
So, the loss on this position was 2.00 debit. On 5 contracts per leg, that's exactly $1000.

Tuesday, January 1, 2013

Trading Forex vs Stocks. Which one offers better chances of long term profitability?

Controversial topic indeed and I'm going to offer my point of view based on my limited experience of 3 years and the knowledge I've been able to gather while intensively studying both markets.